Mitsubishi sides with Nissan, skeptical over holding company

Mitsubishi CEO Osamu Masuko said he hadn’t directly heard about any plan for a holding company. “(Nissan CEO Hiroto) Saikawa personally heard about it, but I wasn’t told about the idea of a holding company myself."

TOKYO – Mitsubishi Motors Corp. is circling wagons with Japanese ally Nissan Motor Co. against any plan to fold the domestic duo into a holding company with alliance partner Renault.

Osamu Masuko, CEO of the three-way alliance’s junior carmaker, said a holding company isn’t even an option. The paramount priority for the group should be independence and mutual respect. Maintaining that balance would be difficult under a holding party, he said.

“I don’t even consider it as one of the options,” the Mitsubishi chief said Feb. 1 in Tokyo. “I think it would be difficult to have management on an equal footing under such a structure.”

Masuko’s sentiments echo those of leadership at Nissan Motor Co., which took a controlling stake in Mitsubishi in 2016 to bring it into the Franco-Japanese alliance.

His remarks came in reaction to an interview by ousted alliance headman, Carlos Ghosn, in which he said he was planning to merge Mitsubishi, Nissan and Renault in a way that ensured “autonomy under one holding company.” He told Japan’s Nikkei newspaper he discussed the plan with Nissan CEO Hiroto Saikawa in September and that it spurred a backlash against.

Two months later, Ghosn was arrested at Tokyo’s Haneda airport and charged with financial misconduct at Nissan. Ghosn said it was part of plot to remove him and block the deeper tie-up.

Masuko said he hadn’t directly heard about any plan for a holding company.

“Saikawa personally heard about it, but I wasn’t told about the idea of a holding company myself. I didn’t hear about it at all and thus haven’t given any consideration to it,” he said.

But he also seemed skeptical it would work.

“I need to consider if that would be acceptable to our employees,” he said. “I wonder if it would be possible to ensure a spirit of equal partnership and management on an equal footing.”

Bad timing?

For his part, Saikawa has repeatedly said now is not the time to discuss any change to the complicated web of cross-holdings that hold the companies together. Renault has a controlling 43.4 percent stake in Nissan. Nissan has a 15 percent stake in Renault with no voting rights. Nissan has a 34 percent stake in Mitsubishi. But Renault and Mitsubishi have no cross-holdings.

Masuko’s comments came a day after a meeting of top alliance management in Amsterdam, where the alliance entity formally overseeing the group is based. Saikawa traveled there to meet Renault CEO Thierry Bollore and newly appointed Chairman Jean-Dominique Senard.

Masuko attended the meetings by video-conference.

Ghosn once ran these regular alliance operational meetings as chairman of all three companies and the alliance entity to boot. But after his arrest, removal as chair at Nissan and Mitsubishi and subsequent resignation from Renault, the companies have agreed to lead through consensus.

“We said we will make decisions based on consensus,” Masuko said.

Decentralized approach

But Masuko said there is also a risk in getting bogged down without a strong, central figure. “We have to avoid slowing down the decision making,” he said. “We don’t want any negative impact.”

On the up side: The decentralized approach can create a strong corporate organization that fosters success, without relying solely on the talents or leadership of one lynchpin person.

“Sooner or later, people have to retire,” Masuko said, in an oblique reference to Ghosn. “We should not have to depend on one person. We should have a good organization.”

In another veiled swipe at Ghosn and the hard-charging executive’s ambitious sales and profit targets, Masuko said his company needs to step back and pursue more sustainable growth.

“I think we need to accept diversity even in how corporate management is done,” Masuko said. “Everyone is trying to speed up, talking about growth and growth. That has put too much stress in various areas, which in turn has resulted in corporate scandals.”

Quarterly report

Meanwhile, Mitsubishi reported a 38 percent jump in third-quarter operating profit that beat expectations as the automaker's global vehicle sales rose, particularly in its main market of Southeast Asia.

Japan's sixth-biggest automaker posted a 28.1 billion yen ($257.96 million) operating profit for October-December, up from 20.4 billion yen a year ago. Mitsubishi's seventh consecutive quarter of year-on-year profit growth came as strong sales in Thailand, Indonesia and the Philippines offset weakness in the United States and China.

Global sales came in at 300,000 deliveries, up from 279,000 a year ago. Southeast Asia sales rose 12 percent.

Mitsubishi generates less sales in the United States and China than its larger domestic rivals, and as a result it has been relatively insulated from a slowdown in demand in the world's top two vehicle markets.

The automaker for years has focused on growing sales in Indonesia, the Philippines, Thailand and other Southeast Asian countries, where demand for family cars from a growing middle class has bolstered sales. The region accounts for roughly one-quarter of its global sales.